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2015 DIGILAW 260 (GAU)

Buragohain Tea Company Ltd. , In Re. . v. .

2015-03-03

UJJAL BHUYAN

body2015
1. Heard Mr. Ratnanko Benarjee, learned senior counsel for the petitioners and Mr. Jishnu Saha, learned senior counsel for the objector, Smt. Sharmila Vijay Shetty. 2. Company Petition No. 3/2013 has been filed by Buragohain Tea Company Ltd. and B&A Ltd. under sections 391(2) and 394 of the Companies Act, 1956 seeking amalgamation of the two companies. The Scheme of amalgamation has been placed on record. Company Petition No. 3/2013 has already been admitted for hearing and this court had also permitted the objector to file affidavit which she has filed objecting to the prayer for amalgamation. 3. In the meanwhile, the objector filed an affidavit on 29.4.2014 in the form of objection, with the prayer that Company Petition No. 3/2013 either be dismissed or be stayed/adjourned sine die. 4. It was this objection which was heard by this court on 11.2.2015. Learned senior counsel appearing for the objector has referred to the affidavit filed on 29.4.2014 and the documents annexed thereto and submits that objector has filed Company Petition No. 186/2013 before the Company Law Board, Eastern Region Bench, Kolkata under sections 397 and 398 of the Companies Act, 1956 alleging mismanagement and oppression of minority shareholder by the Board of Directors of B&A Ltd. He submits that objector was the joint owner of a block of 8,61,913 shares held by her along with her father Hemendra Prasad Barooah. On the death of her father the said block of shares have devolved on her and she is now the sole owner of the said block of shares. He further submits that in addition to that, objector's late mother during her lifetime had gifted her another block of 2,21,230 shares. If these two blocks of shares are taken together, objector is the single largest shareholder in the Company, i.e., B&A Ltd. Insofar the two blocks of shares are concerned, it is the subject-matter of litigation at Jorhat where separate orders of status quo were passed by the civil court. 5. There was an endeavour to change the articles of associations of the Company to divest the ownership of the objector over the block of shares which was jointly owned by her along with her late father. Considering all these aspects Company Law Board had passed an interim order on 24.1.2014 directing continuance of status quo in respect of the shares belonging to the objector, 6. Considering all these aspects Company Law Board had passed an interim order on 24.1.2014 directing continuance of status quo in respect of the shares belonging to the objector, 6. In the above background, learned senior counsel submits that the move by the Company for amalgamation of the transferor-company with the Company is only for the purpose of further strengthening the strangle hold of the present management over the affairs of the Company to the further detriment of the objector. The move for amalgamation of the two companies is not based on sound commercial or business logic and, therefore, this court should not give its imprimatur to the scheme of amalgamation placed before the court. In any case, if the amalgamation proceeding is concluded before the Company Petition filed by the objector is decided by the Company Law Board it will cause serious prejudice to the objector inasmuch as it may result in reduction in the shareholding of the objector leading to her further marginalization in the affairs of the Company. In such circumstances, learned senior counsel submits that it would be sound and proper if the further proceedings in Company Petition No. 3/2013 pending before this court is kept in abeyance till the Company Petition No. 186/2013 is decided by the Company Law Board. 7. Per contra, Mr. Banerjee, learned senior counsel appearing for the petitioners submits that there is no nexus between the two proceedings, one pending before the Company Law Board and the other pending before this court. The matter which is pending before the Company Law Board relates to the alleged grievance of the objector regarding mismanagement and oppression by the management of the Company. If the objector succeeds in the said proceeding, she will be granted the relief that she may be legally entitled to under the law. But that proceeding has no nexus with the prayer for amalgamation of the two companies which is pending before this court in the pending proceeding. 8. It is for the benefit of the two companies that the scheme of amalgamation has been prepared which is awaiting the final decision of the court. But that proceeding has no nexus with the prayer for amalgamation of the two companies which is pending before this court in the pending proceeding. 8. It is for the benefit of the two companies that the scheme of amalgamation has been prepared which is awaiting the final decision of the court. The amalgamation proposal is to further the business interest of the Company and it is difficult to see as to how the objector will be prejudiced if by virtue of the amalgamation the company makes further gains because in the event of her success in the company petition before the Company Law Board she will be entitled to her share of benefit from out of the profits of the company which may accrue by virtue of the amalgamation. 9. Submissions made by learned counsel for the parties have received the due and anxious consideration of the court. 10. As already noticed above, Company Petition No. 3/2013 is regarding amalgamation of the two companies, namely, Buragohain Tea Company Ltd. and B&A Ltd. which has already been admitted by this court for hearing. 11. This application has been filed under sections 391(2) and 394 of the Companies Act, 1956. While section 391 deals with power to compromise or make arrangements with creditors or members, section 392 deals with power of the court to enforce compromise and arrangement. 12. Under sub-section (2) of section 391, if a majority in number representing three-fourths in value of the creditors, or class of creditors, or members, or class of members, as the cases may be, present and voting either in person or, where proxies are allowed, by proxy, at a meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the court, would be binding on all the creditors, all the creditors of the class, all the members, or all the members of the class, as the case may be, and also on the company. Under the proviso, no order sanctioning any compromise or arrangement shall be made by the court unless it is satisfied that all the material facts have been disclosed to it. 13. It is seen from the record that in an earlier proceeding, on orders of this court, meetings of the shareholders of both the Companies were held on 23.3.2013 where it was decided by the shareholders to amalgamate the two Companies. 13. It is seen from the record that in an earlier proceeding, on orders of this court, meetings of the shareholders of both the Companies were held on 23.3.2013 where it was decided by the shareholders to amalgamate the two Companies. Matter is now at the stage of consideration of the court as to whether the scheme of amalgamation is to be approved or not. As already noticed above, this court had granted opportunity to the objector to file affidavit objecting to the scheme of amalgamation pursuant to which she had filed her objection. 14. Objection of the objector to the scheme of amalgamation on the grounds taken will certainly be looked into by this court at the time of passing of the final order. Therefore, prayer of the objector to dismiss the Company Petition No. 3/2013 cannot be gone into at this stage since this prayer is capable of being adjudicated at the time of final disposal of Company Petition No. 3/2013. 15. Regarding the prayer for keeping Company Petition No. 3/2013 in abeyance till disposal of Company Petition No. 186/2013 which is pending before the Company Law Board, the same also does not appear to be justified. 16. A petition under section 397 and/or under section 398 deals with a different aspect altogether relating to the internal affairs of a particular company, namely, prevention of oppression and mismanagement. Such a grievance cannot be juxtaposed with the decision of the two companies for amalgamation under sections 391 and 392 of the Companies Act. Sections 391 and 392 form part of Chapter V of the Companies Act, 1956 dealing with arbitration, compromises, arrangements and reconstructions whereas sections 397 and 398 form part of Chapter VI dealing with prevention of oppression and mismanagement. As already stated above, both the two Chapters operate in different fields and, therefore, this court is of the prima-facie view that the grievance of the objector as highlighted in the Company Petition No. 186/2013 pending in the Company Law Board may not have any bearing on the commercial decision of the two companies for amalgamation which is the subject-matter of Company Petition No. 3/2013 which is yet to be finally decided by this court. 17. 17. In view of above and taking an overall view of the matter, prayer made by the objector for keeping in abeyance the proceedings in Company Petition No. 3/2013 cannot be acceded to and is accordingly over-ruled. Company Petition No. 3/2013 will now proceed for final disposal. List on 19.3.2015.